August 7th, 2018 10:00 AM by Richard Sardella MLO.100007700/NMLS 233568
Stock indexes were better in early pre-open trading. The bond and mortgage markets are under slight pressure but still not a lot of movement since last week. No major data today except June consumer credit at 3:00 pm and before that, at 1:00 pm the Treasury will conduct the $34B 3-yr note auction. Economic data this week doesn’t come into play until Thursday and Friday when July PPI and CPI will be released.
Scanning every newswire, there isn’t much to report today that has a direct impact on US interest rates. The Treasury borrowing (tomorrow $26B of 10s and Thursday $18B of 30s) is likely keeping rate markets intact. Global trade issues are alive and well but nothing new today. China remains defiant that it can and will resist tariffs increasingly imposed on the country.
President Trump lowered the hammer on Iran with the reimposition of sanctions that had been lifted when the nuke deal was put in place by the Obama administration. This is building pressure on Iran’s leaders as Iran’s economy continues to contract and corruption spreads through the country. Trump said that firms doing business with Tehran would be barred from the United States. US allies in Europe are still holding to the original deal with Iran and opposed to the new sanctions. Iran officials rejected Trump’s offer to sit down and talk. Europe’s leaders want to keep the original deal intact, but Europe’s businesses are leaving, not wanting to lose business in the US. Sanctions affect purchases of U.S. dollars, metals trading, coal, industrial software and its auto sector. All that said, we see little direct market impact this morning.
Redfin is reporting housing demand declined 9.6% in June from June 2017, the biggest fall since April 2016. It also says a market stalemate is developing as rates and prices continue to rise, further weakening affordability. The number of people requesting home tours fell 6.1% annually in June. The data covers 15 large metropolitan housing markets. There were 15% fewer offers made on homes as well. In Redfin’ s major market index the total number of homes for sale was 3.8 percent lower than a year ago, and there were 1.6 percent fewer new listings.
At 9:30 am the DJIA opened up +92, NASDAQ increased +40, and the S&P added +7. The 10 yr note is at 2.956%, +1.5 bps from yesterday.
At 10:00 am June JOLTS job openings expected were at 6.650 mil; as reported job openings increased to 6.662 mil; May was revised from 6.638 mil to 6.659 mil.
At 1:00 pm $34B of 3-yr notes will be auctioned.
At 3:00 pm June consumer credit will be the focus; revolving credit is viewed as one indication of ongoing consumer sentiment.
Not looking for much change in the bond and mortgage markets today. Tomorrow the Treasury test demand with $26B of new 10-yr notes.
Yesterday the 10-yr slipped to its 20-day average where it found resistance. This morning it was a little higher, but nothing technically important as rate markets look for something to focus on that will move rates either up or down. Trade tariffs and their impact are still uncertain within markets with the general belief that in the end there won’t be any major implications. The Fed is pledging to increase rates at least once and maybe twice through the rest of the year. Higher short-term rates (if longer rates hold) would narrow the spread between the 2 and 10, fueling more chatter that an inversion will signal coming economic decline.
PRICES @ 10:00 AM
10 yr. note: -6/32 (18 bp) 2.97% +2.5 bp
5 yr. note: -4/32 (12 bp) 2.84% +3 bp
2 Yr. note: -1/32 (3 bp) 2.67% +2 bp
30 yr. bond: -14/32 (44 bp) 3.11% +2.5 bp
Libor Rates: 1 mo.; 2.082%; 3 mo. 2.343%; 6 mo. 2.521%; 1 yr. 2.826% (8/6/18)
30 yr. FNMA 4.0 Aug: @9:30 101.63 -8 bp (-6 bps from 9:30 yesterday)
15 yr. FNMA 4.0: @9:30 102.41 -2 bp (-6 bps from 9:30 yesterday)
30 yr. GNMA 4.0: @9:30 102.27 -5 bp (-5 bps from 9:30 yesterday)
Dollar/Yuan: $6.8275 -$0.0263
Dollar/Yen: 111.13 -0.27 yen
Dollar/Euro: $1.1603 +$0.0047
Dollar Index: 95.08 -0.28
Gold: $1220.40 +$2.70
Crude Oil: $69.47 +$0.47
DJIA: 25,649.44 +147.26
NASDAQ: 7883.54 +23.87
S&P 500: 2860.65 +10.25
Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.
All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.